Headland Capital Partners, formerly HSBC Private Equity (Asia) Ltd, is betting big on India and plans to launch a dedicated India-focused venture capital (VC) fund. Though the size of the fund is not decided, sources said it could be in the range of $70-100 million. Apart from setting up an India-dedicated fund, Headland will allocate 30 per cent of its $230-million Headland Asian Ventures Fund 3 to India. Also, Headland Capital is all set to close its seventh investment, around $10 million, in a telecom service providing company in a couple of weeks. Headland manages $2.4 billion globally.
Last week, the management of HSBC Private Equity (Asia) Ltd, the regional private equity (PE) arm of HSBC Group Holdings PLC, bought the PE business from the bank and renamed it Headland Capital Partners Ltd. Currently, Headland’s management owns 80.1 per cent of the company, while HSBC retains the rest. In India, HSBC PE invested in seven companies, including Trivitron Healthcare Pvt Ltd, NewGen Software Technologies Ltd, FINO Ltd and Avitel Post Studios Ltd. It exited from Sharekhan and MeritTrac (bought over by Manipal). It has already invested about $50 million in India. The deal size ranges from $5 million to $25 million in case of small- and medium-sized companies.
George A Raffini, managing partner, Headland Capital Partners Ltd, told Business Standard that they were exploring the possibility of setting up an India-dedicated fund and other regional-focus funds. “Though there is no immediate plan, the discussion is on with our teammates,” he said.
“In India, both PE and VC funds grow rapidly, which is the reflection of economic growth and reflection of capital requirements. However, we see more potential in the area of $5-25 million investments. We see great potential in the investments in SME sector, which finds money-lending is difficult. The new entrepreneurs in India are young and have knowledge across the sectors with applying innovative ideas, with whom we want to cooperate. We are looking for three-four more deals in India in areas of healthcare, telecom services and technology from our VC fund,” he added.
In Asia, PE funds focus on mid-market expansion capital and buyout transactions, while venture funds typically target early- to mid-stage investments in technology-focused and high-growth businesses. Headland, which advised its first PE fund in 1989, is advising its fifth and sixth Asian PE funds and second and third Asian venture funds. The firm most recently raised The Headland Private Equity Fund 6 L P in 2008, which has committed capital of $1.34 billion, and The Headland Asian Ventures Fund 3 Ltd in 2009. with committed capital of $230 million. The geographic focus of the funds is Greater China, South Korea, Southeast Asia and India.